Last year, I debunked the silly claim that Obama is a conservative.
I almost didn’t write that post. Some things, after all, presumably don’t require a response. Would I waste my time, for instance, responding to someone who claimed that Milton Friedman was a communist?
But sometimes it’s necessary to counter absurd arguments, precisely so they don’t gain a foothold among otherwise sensible people.
That’s why it’s time to write about the economics of a wealth tax.
And I’m doing this because Ronald McKinnon, an economics professor at Stanford University, recently wrote a column for the Wall Street Journal entitled “The Conservative Case for a Wealth Tax.”
I could make this post very short and simply note that there is no conservative (or libertarian) case for higher taxes, period. But let’s use this opportunity to explain the economic impact of taxing wealth.
Professor McKinnon starts out with a very sensible point about the foolishness of higher income tax rates.
…any attempt to impose higher marginal tax rates on even moderately high income earners—as President Obama wants for families earning more than $200,000 per year—can lead to losses in economic efficiency and even to losses in sorely needed government revenue if high earners work less or seek out more loopholes and tax shelters.
I particularly like his point about potential revenue losses. For all intents and purposes, he is saying the Laffer Curve is very strong for those with high income – a point I have made in previous blog posts.
Unfortunately, he then forgets this good analysis and urges a tax on wealth.